Regional Banks Add to Gains on Christmas Eve

NEW YORK (TheStreet) -- Most regional bank stocks fared well on Christmas Eve, ending with gains after an abbreviated holiday trading session.

The broad indices all ended higher, after the U.S. Census Bureau said durable-goods orders for November rose 3.5% from the October, when they dipped 0.7% in part because of a two-week partial shutdown of the federal government.  Economists polled by Reuters on average had expected November durable goods orders to rise by 1.5%.

New orders excluding transportation rose by 1.2% during November, ahead of the 0.8% increase expected by economists.

The Census separately reported that sales of new single-family homes during November rose 2.1% from October, to a seasonally adjusted annual rate of 464,000, ahead of the rate of 440,000 expected by economists.

But last week's decision by the Federal Open Market Committee to taper the Federal Reserve's "QE3" purchases of long-term bonds by $10 billion per month could put a damper on home sales during 2014.

The Mortgage Bankers Association on Tuesday said mortgage applications for the week ended Dec. 20 had declined by over 6% from a week earlier.

A significant increase in long-term interest rates greatly curtailed the wave of home refinancing during 2013, and long-term rates are expected to keep climbing during 2014 as the Fed makes further cuts in its bond purchases.  The market yield on 10-year U.S. Treasury bonds was up 5 basis points Tuesday afternoon to 2.99%.  That's up from 2.85% on Dec. 17, the day before the Fed announced its tapering decision, and up from 1.70% at the end of April.

The KBW Bank Index (I:BKX) was up 0.2% to 69.07, with all but two of the 24 index components showing gains.  First Niagara Financial Group (FNFG) of Buffalo, N.Y., was the leader among large-cap banks, with shares rising 1% to close at $10.53.

First Niagara's shares over the past three trading sessions have been inching back from their 5% drop last Thursday, when the company announced that interim CEO Gary Crosby had been named permanent CEO.


The bank's shares have returned 37% this year.  Crosby took over as interim CEO in March, when former CEO John Koelmel abruptly resigned, after more than doubling the bank's size through a series of deals over a five-year period.

First Niagara's stock trades for 1.8 times tangible book value, according to Thomson Reuters Bank Insight.  The shares trade for 13.2 times the consensus 2014 earnings estimate of 80 cents a share, and for 11.8 times the consensus 2015 EPS estimate of 89 cents.

The following table shows First Niagara's outperformance this year against the KBW Bank Index and the S&P 500 :

FNFG Chart
FNFG data by YCharts

Interested in more on First Niagara Financial Group? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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